It’s called the Banzai Pipeline and you can either gain fame or meet your maker with its waves. Widely considered the world’s most deadly waves, you can find them on Oahu's north shore. Its notoriously huge waves just happen to crest right above a razor sharp reef that’s
just below the surface.
You can rent a board and head out to your death - or a few scrapes at a minimum - or you can do what the pros do and plan ahead. When surfing the big waves of the market, the choices are basically the same. Rest assured, no institutional trader is going to try and catch a wave without knowing everything she or he can about it first.
You can gather the same intelligence with a simple click and drag of your mouse using Dynamic Volume Profile. This will tell you if the big rips or dips driving any given trend are picking up momentum or losing steam.
Why market waves crush retail traders
just below the surface.
You can rent a board and head out to your death - or a few scrapes at a minimum - or you can do what the pros do and plan ahead. When surfing the big waves of the market, the choices are basically the same. Rest assured, no institutional trader is going to try and catch a wave without knowing everything she or he can about it first.
You can gather the same intelligence with a simple click and drag of your mouse using Dynamic Volume Profile. This will tell you if the big rips or dips driving any given trend are picking up momentum or losing steam.
Why market waves crush retail traders
He came from Norfolk, Virginia but made his name half a world away on the deadly Pipe. He was Butch Van Artsdalen, and he did it old school - wading out there himself. He took on 25-foot waves around the world during the 60s and 70s. Take one look at this guy and you can almost smell the confidence.
Until their account gets crushed, most retail traders have the same swagger. They get a few wins - or even a streak under their belt - and they believe their legend is in the making. In reality, they’re wading out to take on market waves that will send their trade (and account) to its death.
This happens because they enter in on reversals after big market moves. They believe they’re getting in at the perfect moment. In reality, they have no visibility as to what’s driving the wave and how much force is still behind it. This can be solved with a quick look at a Dynamic Volume Profile.
A tool that shows a wave’s vitals before you enter
If you’ve never surfed Big Sur, the Pipe or any other big board venue - you’d do well to check out the surf report. Sure, you can head into the water and take your best guess - or you can see the exact time of day and location to catch waves that you can handle.
The same is true with trading. When sizing up a market wave - you can make your best guess, or you can look at hard data. The Dynamic Volume Profile gives you the hard data you need to evaluate market waves. It tells you both where the volume took place, the amount and range for any given period.
ust as important, it provides the value zones for that period. Something most retail traders have no visibility to. Check out the Dynamic Volume Profile on the 6E. With just one addition to your chart - you instantly have the vitals of that big market move.
Knowing when to surf or when to stay on shore
They say the best time to surf the Pipe is in mid-December. There’s a surfing contest about this time - and guess what the spectators are told to watch? You guessed it, the surf report. That will give them the time and location to watch the pros in action.
When you watch volume on a market wave, you’re basically watching the institutions in action. It’s that simple - the folks driving 90% of the market’s volume are determining that Value Zone, and how far the range will extend. You can’t venture towards a big move without knowing this.
Using our same 6E example, we see another move to the downside. Much smaller this time - but with a couple of notable differences. The first wave took place over five or so hours as the European session opened. The second move took place in less than an hour - with more than half of the first wave’s range (75 ticks). Over half the ticks in less than an hour? Also, check out the Value Zone - there’s still considerable institutional interest at the lower price level.
Best to let the wave develop and see if it loses steam - especially if you’re looking for a reversal. Right now, it’s running hot to the downside.
Ride the market’s Pipe with confidence
Surfers and photographers alike have met their fate at ‘Pipe’ including big board studs like Jon Mozon and Tahitian Malik Joyeux. Malik was known for taking these massive waves on with gusto, throwing caution to the wind. The word ‘gnarly’ can’t even come close to describing what this guy took on.
Don’t take the risks that an institutional pro would never dream of. Track the waves in your market using Dynamic Wave Profile. Simply add the tool to your chart and drag from the high (or low) point of a big rip or dip to the corresponding side. Add additional boxes for successive waves and you’ll have the tale of the tape right in front of you.
Watch for waves that are picking up steam with Value Areas that head in the direction of the trend at the middle - with increasing Volume and Range. These will be signs that the continuation is picking up steam. Stalk reversals for declining numbers and value areas that creep higher on uptrends. This will tell you the sellers are stepping in. Apply the opposite for downtrends.
Don’t just wade out into your market blind. Pick the waves you want to ride with precision. Take your profits while steering clear of wipeouts
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